Switzerland, the nation that hasnât gone to war with a foreign power since Napoleon, is reluctantly debating a generational taboo: ceding monetary independence to win a battle over its runaway currency.

Billionaire entrepreneur Christoph Blocher, one of the politicians who called on SNB President Philipp Hildebrand to resign after the bank lost $21 billion last year in a vain attempt to restrain the currency, now supports a franc target.

âThe franc is catastrophically overvalued,â said Blocher, a former justice minister for the Peopleâs Party, Switzerlandâs largest. âItâs almost like economic warfare -- to wage a war, you must use all measures at your disposal, and you must win.â

Switzerlandâs currency is 39 percent overvalued against the euro, based on purchasing power parity as calculated by the Organization for Economic Cooperation and Development. Thatâs âa headache,â according to ABB Ltd. (ABBN), the worldâs largest maker of power-transmission gear, which responded by buying more parts from euro-region suppliers to feed its Swiss factories. Workers at Lonza Group AG, a Basel-based chemicals maker, are working longer hours without extra pay, while VonRoll Infratec AG, a maker of piping systems, is paying some salaries in euros.

âDrastic Decisionsâ

âIf the franc canât be weakened, many machinery makers will have to take drastic decisions this fall,â Economiesuisse, the countryâs biggest business lobby group, said. The Swiss currency appreciated as much as 1.3 percent today, trading at 1.1181 at 1:48 p.m. in Zurich, up from 1.1329 yesterday. Versus the dollar, it was at 77.86 centimes.

The franc, considered a haven in times of turmoil, has appreciated 11 percent versus the euro this year, reaching a record 1.0075 on Aug. 9. Against the dollar, it appreciated to an all-time high of 70.71 centimes earlier this month. A visitor to a Swiss branch of McDonaldâs Corp. pays 128 percent more for a Big Mac than a U.S. diner, up from a 72 percent premium a year ago, according to a Bloomberg index that measures burger prices in dollars, based on data collected by âThe Economist.â

Zurich is already the worldâs second-most expensive city after Oslo, a study conducted by UBS AG (UBSN) showed today. Zurich residents also had the highest wages and purchasing power, it said. Geneva ranked third in terms of prices.